Big FFG(X) risks $1.4B oversized cost

The Navy shortened its orders for Littoral Combat Ships based on the vessels were too small, vulnerable to attack and lightly armed. A new report by the Congressional Research Service (CRS) suggests the (FFG(X)), intended to replace LCS - and awarded to a Wisconsin shipyard that is a unit of Italy’s Fincantieri SpA - may cost 56 percent more than projected partly because it is bigger. The Navy projects that 18 of 20 new FFG(X) will cost on average of $940M apiece, each in inflation-adjusted dollars. The first two are estimated to cost $1B each based on one-time costs. CRS put out “a potential issue” alert to Congress this week that the accuracy of Navy’s estimates considering that “ships of the same general type and complexity that are built under similar production conditions” tend to have similar and substantial higher costs per ton of displacement. The warning was based on the ship’s 7,400 tons, making it about 67 percent of the size of an Arleigh Burke destroyer; and it carries many of the same weapons systems. The latest of the destroyers are estimated to cost $1.9B each, which could mean that the cost for most of the frigates at $1.47B each, “an increase of about 56%,” based on comparing their tonnage to the destroyers. CRS suggested lawmakers ask the Navy basis for “its view that the frigate … can be procured for about one-half the cost.” Capt. Danny Hernandez, spokesman for the Navy’s acquisition office, said the frigate is under “a fixed price” contract for overruns. Hernandez said the Navy’s cost estimate is 1 percent higher than another deal completed by DoD’s independent analysis unit. The CRS suggested lawmakers review how much “process improvements” at Fincantieri’s (Marinette) Wisconsin facility would permit frigates to be built in line with Navy’s cost estimate. One version of its LCS, that the yard is still building, experienced schedule delays before improving. The first FFG(X) is set to begin construction in 2022. (Source: Bloomberg News 05/07/20) Fincantieri won an initial $795M fixed-priced, detailed design and construction contract on April 30 for the first FFG(X), with an option for nine more totaling $5.5B. The company won out over Austal USA of Mobile, Ala.; General Dynamics; and Huntington Ingalls Industries of Pascagoula, Miss. Fincantieri spokesman Eric Dent did not have a comment on the CRS report.  https://www.bloomberg.com/news/articles/2020-05-07/navy-s-big-frigate-risks-an-oversized-1-4-billion-cost-per-ship?sref=obIXyZ7y